The One Big Beautiful Bill and Humpback Whales
In this edition of the Flying Point Update we’re going to talk a little bit about The One Big Beautiful Bill (OBBB), discuss the financial planning potential for newly created TRUMP accounts, and discover some facts about humpback whales.
But, before we dive in, I need to make a correction to the previous newsletter. The Running Your Own Race and Fireflies email erroneously said that the August 15th was the deadline for filing extended s-corp and partnership returns. The correct deadline is September 15th. This has been updated in the newsletter post on the website.
Top of Mind
As I mentioned in our last newsletter, this is comprehensive tax legislation with many moving parts, and we're still waiting for official IRS guidance on implementation for several provisions. I’m not going to cover all the details here, but rather encourage readers to slow down and ignore catchy headlines.
The reality is that sweeping tax changes like this create both opportunities and complexity. While the headlines focus on "no tax on tips" and permanent tax cuts, the devil is in the details. For instance, the tip and overtime deductions have income phase-outs, documentation requirements, and are only temporary through 2028. Meanwhile, some of the most impactful changes, like the doubled estate tax exemption and permanent small business deduction, will require careful planning to maximize their benefits.
In contrast, many of the 2017 Tax Cuts and Jobs Act provisions that were set to expire at the end of 2025 are now permanent law. The seven individual tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%), the doubled standard deduction, and the 20% small business pass-through deduction are all now permanent features of the tax code. This eliminates years of uncertainty that businesses and families have faced about tax planning beyond 2025.
Meanwhile, some of the most impactful new changes, like the doubled estate tax exemption (now $15 million individual/$30 million joint) and the TRUMP Accounts for children, will require careful analysis to optimize their benefits.
Speaking of unique planning situations, buried deep in the 940-page bill is a provision that quintuples the tax deduction for Alaska Native whaling captains, from $10,000 to $50,000, for expenses related to traditional bowhead whale hunts. It's a reminder that comprehensive tax legislation often includes provisions that serve very specific constituencies. While most of us won't be deducting whale hunting expenses, it does highlight how complex our tax code can become when it tries to address every conceivable situation.
Over the coming weeks, we'll be diving into the details as IRS guidance becomes available and helping clients understand which provisions actually apply to their situations. Some changes take effect immediately, others start in 2026, and many of the new deductions are temporary. It's going to take some time to sort through it all properly. Tax law changes need to be evaluated in the context of your specific situation, income level, and long-term goals. What works for one family or business might not be the right strategy for another.
Worth Knowing
One provision that could be valuable for families is the new "TRUMP Account", a tax-advantaged savings account for children. Starting in July 2026, any child who is a U.S. citizen can have one of these accounts opened for them. Parents, relatives, or others can contribute up to $5,000 annually until the child turns 18. Children born between 2025-2028 also receive a $1,000 federal seed deposit.
The accounts function similarly to a traditional IRA: contributions are made with after-tax dollars, earnings grow tax-deferred, and the money is invested in low-cost stock index funds. When the child turns 18, the account converts to a traditional IRA with standard withdrawal rules (including the 10% early withdrawal penalty before age 59½).
While 529 plans remain superior for education savings due to higher contribution limits and tax-free withdrawals for qualified expenses, TRUMP Accounts could be valuable as a long-term retirement vehicle that gets children invested in the stock market early. The power of compound growth over decades could turn modest contributions into substantial retirement savings.
The catch is that these are essentially retirement accounts for children—the money isn't easily accessible for college or other early adult expenses without penalties. For families already maximizing 529 contributions, TRUMP Accounts could provide an additional tax-advantaged savings opportunity.
Mark Your Calendar
September 15th: Two important deadlines - Q3 estimated tax payments are due, and it's the final deadline for calendar year S-Corps and partnerships to file 2024 returns (with extension)
October 16th: Final deadline for individual returns with extensions
Given all the recent tax law changes, this might be a good time to review your estimated tax payments for the remainder of the year, especially if you're a business owner who might benefit from some of the new provisions.
Maine Wildlife Facts
Speaking of whales (thanks to that unusual tax provision!), Will and Frank are both absolutely fascinated by whales and are desperate to see one of the many species that frequent Maine waters. Both boys have a special fondness for humpback whales. These incredible creatures can grow up to 60 feet long and weigh 40 tons, but they're surprisingly acrobatic and famous for their spectacular breaching displays where they launch almost their entire body out of the water!
What's amazing is their migration pattern. Maine's humpbacks travel over 5,000 miles round trip between their feeding grounds here in the Gulf of Maine during summer and their breeding grounds in the Caribbean during winter. They don't eat much during the long journey south, relying on the fat reserves they build up gorging on krill and small fish in our nutrient-rich waters.
Each humpback has a unique pattern on the underside of its tail fluke, like a fingerprint. Researchers use these patterns to identify and track individual whales—some of the humpbacks we see off Maine have been returning to the same feeding areas for decades. Will and Frank were particularly entertained to learn that all those krill dinners can turn whale waste bright pink or orange!
These Maine wildlife facts have been brought to you by Will (almost 7) and Frank (3), Flying Point Advisors' on-staff naturalists.
Questions about any of this? Just reach out - I read every email and love hearing from you. Thanks for reading. You'll hear from me again in about two weeks.
-Mike